Deluxe Reports First Quarter Results; on Track to Achieve 2001 Earnings Target

Apr 19, 2001, 01:00 ET from Deluxe Corporation

    ST. PAUL, Minn., April 19 /PRNewswire/ -- Deluxe Corporation (NYSE:   DLX)
 reported diluted first quarter income from continuing operations today of
 $.59 per share, up from $.58 diluted per share in the first quarter of 2000.
 Deluxe's results in 2001 do not include operations from eFunds Corporation
 (Nasdaq:   EFDS), which was spun-off at year-end 2000.
 
     First Quarter Performance
     Deluxe's first quarter income from continuing operations was
 $42.5 million, or $.59 diluted per share, compared with income from continuing
 operations of $42.0 million or $.58 diluted per share in 2000.
     Revenue was $315.8 million in the first quarter, compared to
 $321.6 million during the same period a year ago.  The 1.8 percent decline in
 revenues was due to a decline in units of 4.0 percent, partially offset by an
 increase in revenue per unit of 2.3 percent.
     Deluxe's gross margin was 63.1 percent of revenue for the quarter,
 compared to 64.1 percent in 2000.  The decline was the result of an increase
 in costs per unit in checks sold through financial institutions due primarily
 to higher delivery costs.
     Selling, general and administrative expense (SG&A) decreased to
 41.7 percent of revenue from 42.6 percent of revenue.  The decrease in 2001
 primarily reflects reduced corporate expenses.
 
     2001 Off To a Good Start
     "We entered 2001 as a very focused company," said Deluxe Chairman and CEO,
 Lawrence J. Mosner.  "With eFunds spun off, we are positioned to devote our
 energies to what we have been doing better than anyone else in the industry
 for 85 years-printing checks.  We have adopted a business strategy in which we
 will continue to develop our e-commerce capabilities to better serve our
 clients and customers; and we will explore acquisitions that leverage our
 existing key competencies and are accretive to earnings and cash flow per
 share."
     The Company anticipates diluted earnings per share of approximately
 $2.45 in 2001, prior to the effect of share repurchases.  Second quarter
 diluted earnings per share in 2001 are expected to be relatively flat with the
 diluted income from continuing operations of $.59 per share in the second
 quarter of 2000.
 
     Segment Reporting
     Beginning in 2001, Deluxe will report three distinct business segments:
 Financial Institution Checks (FI Checks), which sells checks and related
 products and services through financial institutions; Direct Checks, which
 sells checks and related products directly to consumers through direct mail
 and the Internet; and Business Forms, which sells checks, forms and related
 products to small businesses through both financial institutions and directly
 to customers via direct mail and the Internet.
     FI Checks' revenue was down 9.3 percent to $186.2 million in the first
 quarter of 2001, compared to $205.3 million in 2000, due to the effects of
 competitive pricing pressure and a shift by consumers to the direct channel.
 Direct Checks' revenue was up 14.9 percent to $80.1 million, compared to
 $69.7 million last year, due to price increases, growth in Internet orders and
 the acquisition of Designer Checks in February 2000.  Business Forms' revenue
 was up 6.2 percent to $49.5 million in 2001, compared to $46.6 million in
 2000, due to increased sales directly to small businesses.
 
     Share Repurchase Program
     On January 29, 2001, Deluxe announced that its board of directors had
 authorized a 14 million share repurchase program.  Through the end of March,
 two million shares had been repurchased.  This resulted in a $.01 increase in
 first quarter diluted earnings per share as compared to last year.
     In addition to its traditional repurchase activities, the company is
 considering the adoption of a plan to take advantage of the recently issued
 Rule 10b5-1 under the Securities Exchange Act of 1934.  The rule allows a
 company to repurchase its securities at times when it otherwise might be
 prevented from doing so under the insider trading laws, provided the
 repurchases are made pursuant to a plan adopted when the company is not in the
 possession of material nonpublic information.  As a result, companies engaged
 in repurchase programs may start adopting Rule 10b5-1 Plans to allow for the
 continued purchasing of shares during their self-imposed trading blackout
 periods, such as the time periods immediately preceding quarterly earnings
 releases.
 
     Conference Call Information
     Deluxe will hold an open-access teleconference call at 10:00 a.m. Central
 Daylight Time to review the financial results reported today and discuss the
 Company's outlook for 2001.  All interested persons may listen to the call by
 dialing 612-288-0318.  The audio will also be available via a simultaneous
 webcast at http://www.dlx.com .  A replay of the call will be available on
 Deluxe's website until April 30, 2001 or by calling 320-365-3844 (access code
 579233).
 
                               DELUXE CORPORATION
                              STATEMENTS OF INCOME
                (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
                                  (Unaudited)
 
                                 First Quarter              First Quarter
                                     2001                        2000
 
     Revenue                 $315.8                     $321.6
 
       Cost of goods sold     116.5         36.9%        115.4         35.9%
 
     Gross profit             199.3         63.1%        206.2         64.1%
 
       Selling, general &
        administrative
        expense               131.8         41.7%         137.1        42.6%
 
     Operating income          67.5         21.4%         69.1         21.5%
 
       Other income (expense)   1.3          0.4%         (0.6)        (0.2%)
 
     Income before interest
      and taxes                68.8         21.8%         68.5         21.3%
 
       Interest expense        (1.4)        (0.5%)        (3.4)        (1.1%)
 
       Investment income         .6          0.2%          1.7          0.5%
 
     Income before income
      taxes                    68.0         21.5%         66.8         20.8%
 
       Provision for
         income taxes          25.5          8.1%         24.8          7.7%
 
     Income from
      continuing
      operations               42.5         13.5%         42.0         13.1%
 
 
     Discontinued
      operations                 --                        2.3
 
     Net income               $42.5                      $44.3
 
     Diluted average
      common shares
      outstanding        71,908,536                 72,211,053
     Basic and diluted
      per share
      information:
       Income from
        continuing
        operations            $0.59                      $0.58
       Net income             $0.59                      $0.61
     Continuing
      operations:
       Capital
        expenditures           $9.7                      $12.1
       Depreciation
        and amortization
        expense, excluding
        goodwill
        amortization          $16.4                      $14.8
       Goodwill
        amortization
        expense                $1.5                       $0.6
       EBITDA                 $86.8                      $83.8
       Deluxe Value
        Added (DVA)*          $32.3                      $30.9
       Number of
        employees             7,550                      8,660
 
     *DVA represents Deluxe's calculation of return on capital invested in the
 business that exceeds the cost of capital.
 
 
                               DELUXE CORPORATION
                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN MILLIONS)
 
                                                    (Unaudited)
                                                     March 31,     December 31,
                                                        2001           2000
     ASSETS
     Cash and marketable securities                     $19.8          $99.2
     Other current assets                               129.9          120.5
     Long-term assets                                    62.9           43.9
     Property, plant & equipment - net                  169.9          174.0
     Intangibles - net                                  219.4          222.8
       TOTAL ASSETS                                    $601.9         $660.4
 
     LIABILITIES & EQUITY
 
     Short-term debt & current portion of
      long-term debt                                    $78.8         $100.7
     Other current liabilities                          209.7          215.4
     Long-term debt                                      11.3           10.2
     Deferred income taxes                               60.7           60.7
     Other long-term liabilities                          7.9           10.6
     Shareholders' equity                               233.5          262.8
       TOTAL LIABILITIES & EQUITY                      $601.9         $660.4
 
 
                       CONDENSED STATEMENTS OF CASH FLOWS
                (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
                                  (Unaudited)
 
                                                  First Quarter   First Quarter
                                                        2001           2000
 
     Cash provided by (used by):
       Operating activities                             $26.2         $ 32.6
       Investing activities                              (9.1)         (77.4)
       Financing activities                             (93.7)         (44.8)
     Continuing operations                              (76.6)         (89.6)
       Discontinued operations                             --          (15.6)
     Net decrease in cash                               (76.6)        (105.2)
     Cash:  beginning of period                          80.7          124.4
         end of period                                   $4.1         $ 19.2
     Operating cash flow per share*                    $ 0.36         $ 0.45
 
     *Operating cash flow per share represents cash from operating activities
 divided by dilutive average shares outstanding.
 
 
                               DELUXE CORPORATION
                               REVENUE BY SEGMENT
                             (DOLLARS IN MILLIONS)
 
                                  (Unaudited)
 
                                                 First Quarter    First Quarter
                                                        2001           2000
 
     FI Checks                                         $186.2         $205.3
     Direct Checks                                       80.1           69.7
     Business Forms                                      49.5           46.6
       Total Deluxe                                    $315.8         $321.6
 
     About Deluxe
     Since its beginning in 1915, Deluxe has been instrumental in shaping the
 payments industry.  The company has three business segments:  FI Checks, which
 sells checks and related products and services through financial institutions;
 Direct Checks, which sells checks and related products directly to consumers
 through direct mail and the Internet; and Business Forms, which sells checks,
 forms and related products to small businesses through both financial
 institutions and directly to customers via direct mail and the Internet.  More
 information about Deluxe can be found at http://www.dlx.com
 
     Statements made in this release concerning the Company's or management's
 intentions, expectations, or predictions about future results or events are
 "forward-looking statements" within the meaning of the Private Securities
 Litigation Reform Act of 1995.  Such statements reflect management's current
 expectations or beliefs, and are subject to risks and uncertainties that could
 cause actual results or events to vary from stated expectations, which
 variations could be material and adverse.  Factors that could produce such a
 variation include, but are not limited to, the following:  the inherent
 unreliability of earnings, revenue and cash flow predictions due to numerous
 factors, many of which are beyond the Company's control; developments in the
 demand for the Company's products and services; relationships with the
 Company's major customers and suppliers; unanticipated delays, costs and
 expenses inherent in the development and marketing of new products and
 services; the impact of governmental laws and regulations; and competitive
 factors.  In addition, the Company's stock repurchase activities are subject
 to certain pricing restrictions, stock market forces, management discretion
 and various regulatory requirements.  As a result, there can be no assurance
 as to the timing and/or amount of shares that the Company may repurchase under
 its stock repurchase program.  Additional information concerning these and
 other factors that could cause actual results and events to differ materially
 from the Company's current expectations is contained in the Company's Form
 10-K for the year ended December 31, 2000.
 
 

SOURCE Deluxe Corporation
    ST. PAUL, Minn., April 19 /PRNewswire/ -- Deluxe Corporation (NYSE:   DLX)
 reported diluted first quarter income from continuing operations today of
 $.59 per share, up from $.58 diluted per share in the first quarter of 2000.
 Deluxe's results in 2001 do not include operations from eFunds Corporation
 (Nasdaq:   EFDS), which was spun-off at year-end 2000.
 
     First Quarter Performance
     Deluxe's first quarter income from continuing operations was
 $42.5 million, or $.59 diluted per share, compared with income from continuing
 operations of $42.0 million or $.58 diluted per share in 2000.
     Revenue was $315.8 million in the first quarter, compared to
 $321.6 million during the same period a year ago.  The 1.8 percent decline in
 revenues was due to a decline in units of 4.0 percent, partially offset by an
 increase in revenue per unit of 2.3 percent.
     Deluxe's gross margin was 63.1 percent of revenue for the quarter,
 compared to 64.1 percent in 2000.  The decline was the result of an increase
 in costs per unit in checks sold through financial institutions due primarily
 to higher delivery costs.
     Selling, general and administrative expense (SG&A) decreased to
 41.7 percent of revenue from 42.6 percent of revenue.  The decrease in 2001
 primarily reflects reduced corporate expenses.
 
     2001 Off To a Good Start
     "We entered 2001 as a very focused company," said Deluxe Chairman and CEO,
 Lawrence J. Mosner.  "With eFunds spun off, we are positioned to devote our
 energies to what we have been doing better than anyone else in the industry
 for 85 years-printing checks.  We have adopted a business strategy in which we
 will continue to develop our e-commerce capabilities to better serve our
 clients and customers; and we will explore acquisitions that leverage our
 existing key competencies and are accretive to earnings and cash flow per
 share."
     The Company anticipates diluted earnings per share of approximately
 $2.45 in 2001, prior to the effect of share repurchases.  Second quarter
 diluted earnings per share in 2001 are expected to be relatively flat with the
 diluted income from continuing operations of $.59 per share in the second
 quarter of 2000.
 
     Segment Reporting
     Beginning in 2001, Deluxe will report three distinct business segments:
 Financial Institution Checks (FI Checks), which sells checks and related
 products and services through financial institutions; Direct Checks, which
 sells checks and related products directly to consumers through direct mail
 and the Internet; and Business Forms, which sells checks, forms and related
 products to small businesses through both financial institutions and directly
 to customers via direct mail and the Internet.
     FI Checks' revenue was down 9.3 percent to $186.2 million in the first
 quarter of 2001, compared to $205.3 million in 2000, due to the effects of
 competitive pricing pressure and a shift by consumers to the direct channel.
 Direct Checks' revenue was up 14.9 percent to $80.1 million, compared to
 $69.7 million last year, due to price increases, growth in Internet orders and
 the acquisition of Designer Checks in February 2000.  Business Forms' revenue
 was up 6.2 percent to $49.5 million in 2001, compared to $46.6 million in
 2000, due to increased sales directly to small businesses.
 
     Share Repurchase Program
     On January 29, 2001, Deluxe announced that its board of directors had
 authorized a 14 million share repurchase program.  Through the end of March,
 two million shares had been repurchased.  This resulted in a $.01 increase in
 first quarter diluted earnings per share as compared to last year.
     In addition to its traditional repurchase activities, the company is
 considering the adoption of a plan to take advantage of the recently issued
 Rule 10b5-1 under the Securities Exchange Act of 1934.  The rule allows a
 company to repurchase its securities at times when it otherwise might be
 prevented from doing so under the insider trading laws, provided the
 repurchases are made pursuant to a plan adopted when the company is not in the
 possession of material nonpublic information.  As a result, companies engaged
 in repurchase programs may start adopting Rule 10b5-1 Plans to allow for the
 continued purchasing of shares during their self-imposed trading blackout
 periods, such as the time periods immediately preceding quarterly earnings
 releases.
 
     Conference Call Information
     Deluxe will hold an open-access teleconference call at 10:00 a.m. Central
 Daylight Time to review the financial results reported today and discuss the
 Company's outlook for 2001.  All interested persons may listen to the call by
 dialing 612-288-0318.  The audio will also be available via a simultaneous
 webcast at http://www.dlx.com .  A replay of the call will be available on
 Deluxe's website until April 30, 2001 or by calling 320-365-3844 (access code
 579233).
 
                               DELUXE CORPORATION
                              STATEMENTS OF INCOME
                (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
                                  (Unaudited)
 
                                 First Quarter              First Quarter
                                     2001                        2000
 
     Revenue                 $315.8                     $321.6
 
       Cost of goods sold     116.5         36.9%        115.4         35.9%
 
     Gross profit             199.3         63.1%        206.2         64.1%
 
       Selling, general &
        administrative
        expense               131.8         41.7%         137.1        42.6%
 
     Operating income          67.5         21.4%         69.1         21.5%
 
       Other income (expense)   1.3          0.4%         (0.6)        (0.2%)
 
     Income before interest
      and taxes                68.8         21.8%         68.5         21.3%
 
       Interest expense        (1.4)        (0.5%)        (3.4)        (1.1%)
 
       Investment income         .6          0.2%          1.7          0.5%
 
     Income before income
      taxes                    68.0         21.5%         66.8         20.8%
 
       Provision for
         income taxes          25.5          8.1%         24.8          7.7%
 
     Income from
      continuing
      operations               42.5         13.5%         42.0         13.1%
 
 
     Discontinued
      operations                 --                        2.3
 
     Net income               $42.5                      $44.3
 
     Diluted average
      common shares
      outstanding        71,908,536                 72,211,053
     Basic and diluted
      per share
      information:
       Income from
        continuing
        operations            $0.59                      $0.58
       Net income             $0.59                      $0.61
     Continuing
      operations:
       Capital
        expenditures           $9.7                      $12.1
       Depreciation
        and amortization
        expense, excluding
        goodwill
        amortization          $16.4                      $14.8
       Goodwill
        amortization
        expense                $1.5                       $0.6
       EBITDA                 $86.8                      $83.8
       Deluxe Value
        Added (DVA)*          $32.3                      $30.9
       Number of
        employees             7,550                      8,660
 
     *DVA represents Deluxe's calculation of return on capital invested in the
 business that exceeds the cost of capital.
 
 
                               DELUXE CORPORATION
                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN MILLIONS)
 
                                                    (Unaudited)
                                                     March 31,     December 31,
                                                        2001           2000
     ASSETS
     Cash and marketable securities                     $19.8          $99.2
     Other current assets                               129.9          120.5
     Long-term assets                                    62.9           43.9
     Property, plant & equipment - net                  169.9          174.0
     Intangibles - net                                  219.4          222.8
       TOTAL ASSETS                                    $601.9         $660.4
 
     LIABILITIES & EQUITY
 
     Short-term debt & current portion of
      long-term debt                                    $78.8         $100.7
     Other current liabilities                          209.7          215.4
     Long-term debt                                      11.3           10.2
     Deferred income taxes                               60.7           60.7
     Other long-term liabilities                          7.9           10.6
     Shareholders' equity                               233.5          262.8
       TOTAL LIABILITIES & EQUITY                      $601.9         $660.4
 
 
                       CONDENSED STATEMENTS OF CASH FLOWS
                (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
 
                                  (Unaudited)
 
                                                  First Quarter   First Quarter
                                                        2001           2000
 
     Cash provided by (used by):
       Operating activities                             $26.2         $ 32.6
       Investing activities                              (9.1)         (77.4)
       Financing activities                             (93.7)         (44.8)
     Continuing operations                              (76.6)         (89.6)
       Discontinued operations                             --          (15.6)
     Net decrease in cash                               (76.6)        (105.2)
     Cash:  beginning of period                          80.7          124.4
         end of period                                   $4.1         $ 19.2
     Operating cash flow per share*                    $ 0.36         $ 0.45
 
     *Operating cash flow per share represents cash from operating activities
 divided by dilutive average shares outstanding.
 
 
                               DELUXE CORPORATION
                               REVENUE BY SEGMENT
                             (DOLLARS IN MILLIONS)
 
                                  (Unaudited)
 
                                                 First Quarter    First Quarter
                                                        2001           2000
 
     FI Checks                                         $186.2         $205.3
     Direct Checks                                       80.1           69.7
     Business Forms                                      49.5           46.6
       Total Deluxe                                    $315.8         $321.6
 
     About Deluxe
     Since its beginning in 1915, Deluxe has been instrumental in shaping the
 payments industry.  The company has three business segments:  FI Checks, which
 sells checks and related products and services through financial institutions;
 Direct Checks, which sells checks and related products directly to consumers
 through direct mail and the Internet; and Business Forms, which sells checks,
 forms and related products to small businesses through both financial
 institutions and directly to customers via direct mail and the Internet.  More
 information about Deluxe can be found at http://www.dlx.com
 
     Statements made in this release concerning the Company's or management's
 intentions, expectations, or predictions about future results or events are
 "forward-looking statements" within the meaning of the Private Securities
 Litigation Reform Act of 1995.  Such statements reflect management's current
 expectations or beliefs, and are subject to risks and uncertainties that could
 cause actual results or events to vary from stated expectations, which
 variations could be material and adverse.  Factors that could produce such a
 variation include, but are not limited to, the following:  the inherent
 unreliability of earnings, revenue and cash flow predictions due to numerous
 factors, many of which are beyond the Company's control; developments in the
 demand for the Company's products and services; relationships with the
 Company's major customers and suppliers; unanticipated delays, costs and
 expenses inherent in the development and marketing of new products and
 services; the impact of governmental laws and regulations; and competitive
 factors.  In addition, the Company's stock repurchase activities are subject
 to certain pricing restrictions, stock market forces, management discretion
 and various regulatory requirements.  As a result, there can be no assurance
 as to the timing and/or amount of shares that the Company may repurchase under
 its stock repurchase program.  Additional information concerning these and
 other factors that could cause actual results and events to differ materially
 from the Company's current expectations is contained in the Company's Form
 10-K for the year ended December 31, 2000.
 
 SOURCE  Deluxe Corporation